Manuel Quiterio Cedeno, of Cicom news service, analyzes the government’s track record of how the industry has benefited from taxes imposed on the tourism industry to coincide with the current debate about the Ministry of Tourism’s announced US$5 charge on airfares sold abroad starting 1 August. The National Hotel Association has rejected the charge on grounds that airfares are already overtaxed. Cedeno looks into the numerous taxes paid by the tourism sector.
Cedeno says that the simplistic vision of the tax’s advocates is that RD$150 will mean little for visitors. He poses some questions: “Why is the state so tenacious in resisting investment in tourism of at least part of the direct resources the sector generates? There are laws that specialize tax funds for tourism, but these are not complied with. Who guarantees that this new specialization of a surcharge will be met? Should taxes that are not passed by Congress be accepted?”
He said that there was some support in the sector for the new tax, but that was before the 33% increase of the ITBIS tax, the new 1% on commercial property, and the appreciation of the peso. He said that Asonahores analysts estimate that the real worth of the peso is RD$35 to US$1.
He also says the authorities by-passed Asonahores in deciding to impose the tax and how it would be used.
Cedeno points out that each new tax on tourism packages affects the profitability of Dominican hoteliers and that this cannot be passed on to foreign tourists as they can to domestic travelers.
He also makes the point that taxes on airfares are already very high. According to Asonahores, they add up to US$66 on regular flights and US$56 on charter flights. In 2004, these taxes produced RD$5.5 billion for the government. Thus the aspiration that the government use a small part of what the sector generates to invest in the regions that contribute to the tax.
He mentions that the Punta Cana International Airport generated more than RD$4 billion for the government in the 2003-2004 period, but it was not until this year that for the first time the government announced the construction of an important public work, the Punta Cana-Uvero Alto highway, with a US$40 million (RD$1.2 billion) budget.
Cedeno argues that if the government only used RD$1 billion a year to invest in the Punta Cana area, a big change would be generated. He comments that the airport revenues are 30% of the total collected by the state in the area.